Monthly Archives: February 2022

Wheat risk off & limited down on Friday

Wheat risk off and limit down on Friday
Wheat markets on Friday went into full risk off/profit taking mode with the US wheat futures market trading lock limit lower across all 3 contracts. Front/spot month March contracts however have no limit which saw CBOT -83c, KC -76.25c and MGEX 77.75c.
The Russian incursion into Ukraine has so far been met with strong resistance from Ukraine forces and citizens with no major cities falling to Russian forces yet. Overnight however Putin has ordered his military command to put nuclear armed forces on high alert. Will expect as risk on approach to markets this morning as a result.
GASC over the weekend has announced another tender with both FOB and CFR offers acceptable in an attempt to encourage more offers. With ports closed and Azov see blockaded we may see force majeure declarations. 2 offers from France FOB at 389.92 from Soufflet and 399 from Viterra and 1 from Cargill at 447 from the US, no CFR offers

Wheat markets limit up on the open and receding slightly now

Putin appears to be getting a bit more than he bargained for in Ukraine and the effect of a potentially escalated/prolonged conflict is being felt in the commodities this morning, following a profit taking collapse Thurs/ Friday.
The GASC tender is under scrutiny by wheat traders to see not only if enough offers are received, but if scheduled shipments can be made…
China sold 522k tonnes of wheat from state reserves, 99% of the total offered.

Mpls wheat +13
KC wheat +45
Chic wheat +45
Matif wheat +24
Canola +19
Rapeseed +24
Soybeans +39
Soybean oil +290
Crude +354
Corn +27
CAD -9

Strong open for wheat markets

Strong open for wheat markets following Russia’s decision to send military in to Ukraine

Canola processing declined 28.9% in January from a year ago, according to Statistics Canada data released Tuesday on agency’s website.
• Oil production totaled 272k tons, and meal output at 387k tons
• Aug.-Jan. crushings down 15.7% from year ago to 4.454m tons

Wilmar International Ltd., one of the world’s biggest food processors, warned that the outlook for soybean crushing will be challenging due to surging prices of the oilseed and poor hog margins in China.
The Singapore-based company, which operates more than 300 plants in China, posted weaker sales volume from soybean crushing in 2021. This comes as Chicago soy futures are near a nine-year high, while Chinese hog prices have lost about 50% in the past year, denting demand for soymeal used in feed.

Russia recognized two breakaway regions of Ukraine, the Donetsk People’s Republic and the Luhansk People’s Republic as independent and has ordered troops into those regions for “peacekeeping.” The US immediately put sanctions on those two regions prohibiting trade and investment there.
Brazil exported 1.7 MMT of soybeans during the third week of February bringing the total so far for the month at 3.3 MMT. Last year Brazil exported 2.6 MMT during the month of February. The country shipped 242,122 MT (8.9 million bushel) per working day.
Brazil’s soybean harvest is 33% complete. Farmers made progress on field work in 9% of the estimated area according to AgRural.
Brazil’s largest soybean producing state, Mato Grosso, was 67.7% harvested as of February 18 according to IMEA. Although dryness is an issue in Southern Brazil, excessive rains in Mato Grosso and Minas Gerais may have hurt the soybean quality.
AgRural is expected to release new Brazil soybean crop estimates after down grades in the last three estimates.
Chinese buyers purchased one cargo of Brazil soybeans for April shipment and another four cargoes from the US for October/November shipment according to anecdotal reports.
Russia exported 900,000 MT of wheat for the week ending February 17. The marketing-year-to-date total now stands at 25.2 MMT according to Russia’s agriculture ministry.
PIRSA reported South Australia’s wheat production is 5.5% lower than last year but still beats the 5 year average. Production for the 2021/22 marketing year is 4.7 MMT compared to 4.4 MMT last year. PIRSA estimates South Australia’s barley production at 2.2 MMT and canola production at 417.4 TMT.
Some soybean crushing plants in China have suspended soybean crushing operations amid declining domestic soy crush margins. Bunge’s plant in Tianjin halted operations from February 14 to April 3. Their plant in Nanjing plans to be shutdown from late February to March. Soybean crush margins in China deteriorated rapidly after China’s Lunar New Year holiday. Import costs of soybeans are higher on South American production declines and meal demand is down due to the decline in hog prices since December. According to CNGOIC, China’s soybean stocks were estimated at 3.95 MMT, which is 1.5 MMT lower than the same week in 2021. The market is most likely waiting for the government to release reserves.

Mpls wheat +7
KC wheat +15
Chic wheat +11
Matif wheat +3
Canola +15
Rapeseed +7
Soybeans +4
Soybean oil +97
Crude +304
Corn +8
CAD +10

Wheat futures retreat yesterday with Russian troops

Wheat futures retreat yesterday with Russian troops
After claims from Russia yesterday that military forces had been partially withdrawn from the border with Ukraine, wheat futures came under pressure with double digit losses in response. The US President warned that an invasion is still very possible with their own analysts yet to verify the withdrawal. Boris Johnson accused Russia of sending mixed signals on Ukraine.
After weeks of stagnant price action, Australian wheat prices surged following Friday’s CBOT action. ASX made a new monthly high with March trading up to $368/mt. APW FOB ex WA for June/July rallied $10 over the past week to USD355/mt. Feed wheat markets also rallied with trades CFR Vietnam from early last week in the low to mid $320s rallying to bids mid $330s.
Russia’s blockade of the Black and Azov seas for Ukraine under the guise of ‘military drills’ has successfully been circumnavigated by a cargo ship MV Melia after Ukraine’s Ministry of Infrastructure found deep water routes closer to Ukraine’s shoreline.

Grains recovered overnight after Tuesday’s losses
Private consultancy Agroconsult yesterday estimated 2021/22 Brazilian soybean production at 125.8 MMT after a crop tour, down 8.4 MMT projected before the tour, with yields pegged at a six year low of 51.7 60 kilogram bags per hectare, or 41.6 bushels per acre.
European Commission data yesterday showed cumulative soft wheat exports since July 1 at 17.27 MMT, up from 16.87 MMT over the same span last sea-son, with corn imports up 10.12 MMT down from 10.46 MMT last year.
January NOPA soybean crush came in at 182.2 million bushels yesterday, well below the average 186.7 mbu trade expectation, and down from December’s 186.4 mbu (the record crush for any single month), and 184.7 mbu last January. Trade estimates ranged from 183.7-188.5 million bushels.
Bayer informed its retail partners that they may not be able to fulfill some glyphosate contracts due to a supply issue involving a key raw material. An undisclosed supplier experienced a manufacturing problem and repairs are expected to take around three months.
Farmland values continued to increase through the end of 2021 according to surveys conducted by the Kansas City and Chicago Federal Reserve banks. The results from the Kansas City district showed values for all types of farm land 20% higher than one year ago and the Chicago district 22% higher. More than 50% of respondents expected farmland values to increase in 2022.
MGEX Spring Wheat stocks are 8.9% lower than a year ago according to the exchange’s weekly report.
Ukraine farmers planted 7.7 million hectares (19.0 million acres) of winter crops, up 5% year over year.
Poultry farms are on high alert and taking steps to increase biosecurity after a commercial turkey flock in Indiana was infected with bird flu on February 9. The flock of 29,000 were killed to prevent spread of the disease.
Russia analyst SovEcon pegged the ‘22/23 Russian wheat crop at 84.8 MMT.

Mpls wheat -2
KC wheat +1
Chic wheat +1
Matif wheat -3
Canola +6
Rapeseed +13
Soybeans +12
Soybean oil +37
Crude +140
Corn +2
CAD +30

Soybeans led another strong overnight session

Seems that Russia sabre rattling have cooled down a bit this morning
Soybeans led another strong overnight session of volume and popped off early last night, but the spot March contract couldn’t clear the $16/ bushel mark and lost momentum as the overnight session progressed. Soybean bulls remained quite persistent into the end of last week but will that continue, especially with an outside reversal potentially looming already today?
Paraguay’s soybean harvest could fall by as much as 50% to some 5 million tons in what would be its lowest level in the last decade due to a drought affecting the region, Paraguay’s Agriculture and Livestock minister, Santiago Bertoni, told Reuters on Friday. Paraguay, the world’s fourth largest exporter of soybeans, produced close to 10 million tons in the previous cycle. But yields in the 2021/2022 season fell in most crop areas to about 1 ton per hectare, far below the average of 2.8 tons per hectare.

Taiwan millers are seeking 55k tonnes of U.S. milling wheat in a range of different types, for April shipment from the Pacific Northwest.
Bangladesh is seeking a nominal 50k tonnes of wheat in a tender closing today, with their lowest offer coming in at $391/tonne C&F for shipment during the next 40 days. Offers ranged up to $412/tonne C&F.
China sold 520k tonnes of wheat from state reserves this week, or 99% of the total offered, at an average price of $407 per tonne. They’ve sold a total of just under 2.9 MMT from state reserves since auctions began in late October.
SovEcon reported February Russian grain exports at 2.9 MMT, up from 2.8 MMT in January, with wheat at 2.6 MMT versus 2.4 MMT last month.
Egypt’s government is reportedly working on measures to protect its wheat imports, including diversifying origins and overhauling food subsidy programs, given the potential Russia-Ukraine conflict; the country buys around 50% of its wheat imports from the former and 30% from the latter.

Mpls wheat -5
KC wheat -8
Chic wheat -11
Matif wheat 1
Canola -11
Rapeseed -8
Soybeans -18
Soybean oil -35
Crude -63
Corn -5
CAD -7